UAE distressed asset sales soar

The UAE is at the top of the list for reduced priced luxury goods in the hands of hard-up owners looking to unload them.

DUBAI // The Emirates has emerged as one of the largest distressed-asset markets in the world in the past year, with cash-rich buyers taking advantage of discounts of up to 40 per cent on aeroplanes, yachts and high-end cars, brokers say. "The UAE is the number one market for buying and selling these assets right now," said Noam Perski, the chief executive of JamesList, an online bazaar for luxury goods.

Expensive cars such as the Ferrari 430, targeted at first-time sports car buyers, have hit the market in the largest numbers. One such 430 in Dubai is selling for ?83,000 (Dh415,530) on JamesList, a significant discount from the ?123,000 asking price for a new one. Extremely rare luxury goods have been less affected because they are more in demand. "The kind of thing you go out and buy with your bonus were the first to hit the market," Mr Perski said. "The UAE used to be an import market for cars, pulling inventory from all kinds of places. In the second half of last year, we saw them exporting for probably the first time."

Al Aweer Used Car Market, located near Emirates Road in Dubai, has gained a reputation as the cheapest place in the world to buy luxury second-hand cars, brokers say. The once-resplendent market for business jets has also been nursing its wounds since the global downturn began. In the boom years between 2004 and 2008, everything from the price of a business jet to the cost of chartering one reached record highs.

That has all changed. About 18 per cent of the 3,300-strong global fleet of executive jets is for sale, according to industry estimates. And prices are down 15 to 40 per cent from the peak two years ago, said Emad Sharghi, the chief executive of Executive Air Sales in Abu Dhabi. "Anyone who needs an aircraft has another eight to 10 months for a window of opportunity to get a good valuation," he said.

It is difficult to know the total number of aeroplanes that Middle East owners are seeking to sell, because sales are often done discreetly and through brokers in Europe. There are an estimated 400 executive jets in the Middle East, with 80 per cent based in Saudi Arabia and the UAE, according to the Middle East Business Aviation Association. Only 10 executive jets from Middle East countries are known to be for sale in Europe, said Jens Dreyer, a broker based in Frankfurt.

The real number could be higher, especially if bargain hunters align their prices in line with sellers. Bombardier Challenger 605 jets, which can seat up to 12 passengers and fly 7,427km, cost US$25 million (Dh91.8m) new, but buyers are asking for discounts of up to $7m. "If the price they could sell it for was right, probably 15 to 20 per cent of the Middle East fleet would change hands," Mr Sharghi said.

Distress sales of yachts have also flooded the market. High-performance boats and top-end yachts had become a hit in the region in recent years, but many are now on the market with big discounts, said Sam al Abbasi, the managing director of 4Yacht Arabia, a brokerage. About 40 per cent of the roughly 150 yachts for sale in the UAE are from distressed sellers, he said. "Owning a yacht is a very expensive thing," he said. "It's like having two other families to support."

Heavily discounted off-plan property flooded the market last year as developers encountered cash-flow problems and slowed or halted construction. But with bank lending tight and confidence in the property market low, there are few buyers for off-plan homes today, estate agents say. * with additional reporting by Gureni Lukwaro